Consumer genetic testing company 23andMe sees an opportunity to get in on the weight loss boom.
The company, through its Lemonaid Health business, plans to launch a GLP-1 weight loss telehealth membership by the end of the month, it announced last week along with its fiscal first-quarter financial results.
The service will enable members to be prescribed and receive brand-name or compounded semaglutide medications, the company said.
"The addition of weight loss management for our customers fits directly within our strategy of delivering services to improve an individual's health through preventive actions. We also continue to add features to our membership services as we focus on creating longitudinal value that can help our members remain focused on improving their health," Anne Wojcicki, co-founder and CEO of 23andMe, told investors during the earnings call Thursday.
In 2021, 23andMe spent $400 million to buy Lemonaid Health, a virtual care and pharmacy provider, to integrate its personalized genetics service more deeply into primary care.
The company also plans to roll out a large-scale genetic research study to help identify the genetic mechanisms that may drive the efficacy and potential side effects of GLP-1 medications.
"Through our unique research model, we believe we can quickly scale the study through our outreach to the millions of 23andMe customers who have consented to participate in research," Wojcicki said on the earnings call.
23andMe launched 17 years ago offering at-home genetic testing kits for ancestry and for health.
The company, which went public three years ago, has since amassed a huge database of genetic data based on its 13 million users. 23andMe has pivoted its strategy to leverage its trove of data for research and to make and sell its own therapies. The company also is expanding its core consumer genetic testing into a new business line called its genomic health service.
23andMe has worked to diversify its DNA business over the years, expanding from ancestry exploration to testing for health and lifestyle factors. The company has obtained FDA clearances for direct-to-consumer tests for cancer risks, such as to identify genetic biomarkers linked to prostate cancer, for example, as well as BRCA mutations tied to breast and ovarian tumors. It has also looked to leverage its massive trove of DNA data for clinical research and in the development of its own immuno-oncology and inflammation therapies.
While 23andMe braches out into the lucrative weight loss market, it is simultaneously reducing the size of its therapeutics team, which focuses on internally developing new drugs. According to an Aug. 8 regulatory filing, 23andMe shut down one segment of its therapeutics business, called therapeutics discovery, and cut 30 staff positions.
The move does not impact 23andMe's two drugs in clinical trials that it will continue to develop.
"I also want to make it clear that today's news does not impact our ability to pursue collaborations that leverage our database for discovery and other therapeutic insights or the Therapeutics development team led by Jennifer Low or indicate any change in enthusiasm for our two clinical assets," Wojcicki told investors during the earnings call. "We are still moving both forward in the clinic and exploring optimal development and funding paths for these assets."
For the latest quarter, 23andMe reported total revenue of $40 million, down 34% from its revenue of $61 million during the same period a year ago. Company executives blamed the declining revenue on "lower research revenue" after the conclusion of the GSK collaboration exclusivity term in July 2023 as well as "lower consumer revenue from decreased [personal genome service] kit volumes and telehealth orders."
23andMe went public in early 2021 through a $3.5 billion special purpose acquisition company deal led by Sir Richard Branson’s Virgin Group that was slated to deliver $984 million to its coffers. At the time, Branson and Wojcicki each chipped in $25 million to the company through a $250 million round of private investments in its public equity, also known as PIPE.
But the company's share price has plummeted in the time since, falling from a high of just over $16. Last November, the company received a delisting notice from the Nasdaq. It has until November to raise its stock price and remain compliant.
The stock has lost nearly 60% of its market value in 2024, closing at 36 cents a share on Friday.
In April, Wojcicki signaled plans to take the company private. In a July 29 Securities and Exchange Commission filing, she indicated that she was working with advisers and intended to begin speaking to potential partners and financing sources. She made a nonbinding proposal to acquire all outstanding shares of 23andMe not already owned by her or her affiliates for 40 cents per share.
Currently, Wojcicki, who also sits as chair of the board, holds 49.99% of the voting power over the company.
On Aug. 2, a special committee formed by the company rejected Wojcicki's proposal and said in a letter that it was "disappointed" with the offer because it didn't offer a premium to the stock price and lacked financial commitments.
"We view your proposal as insufficient and not in the best interest of the non-affiliated shareholders. Therefore, we are not prepared to move forward under the terms provided," the committee wrote.
The committee asked Wojcicki to withdraw her stated intent to oppose any alternative transaction so that the company can "fully assess whether there is interest from third parties in a transaction that would maximize value for all shareholders."
The committee also said in the letter it was prepared to provide her and potential investors with a limited amount of additional time to submit a revised proposal in line with the company's expectations.
Editor's note: This article has been edited to indicate that 23andMe is reducing the size of its therapeutics team, particularly its therapeutics discovery subgroup.